With continued problems in the mortgage markets, some HMDA-reporting institutions may be required to repurchase loans from an investor because of defaults or may have the opportunity to acquire loans in bulk from another institution. When a loan is repurchased by the originator within the same calendar year as originated, the originator should not report it as sold, and the purchaser (that subsequently puts it back to the originator) should not report it as purchased. However, if the repurchase happens in a subsequent calendar year, all the purchases and repurchases should be reported in their respective calendar years.
Bank A originates loan 001 and sells it to Bank B in 2011. However, in 2011, Bank A buys the loan back from Bank B.
- Bank A – Reporting of 2011 HMDA Data: Bank A would report loan 001 as an origination and, after the buy-back in the same year (2011), should make sure that the Type of Purchaser code is 0 and not codes 1 through 9. Bank A does not report the buyback of loan 001 as a purchased loan.
- Bank B – Reporting of 2011 HMDA Data: Bank B would not report its original purchase of loan 001 from Bank A.
Bank A originates loan 002 and sells it to Bank B in 2011. However, in 2012, Bank A buys the loan back from Bank B.
- Bank A – Reporting of 2011 and 2012 HMDA Data: Bank A would report loan 002 as an origination and report the proper purchaser type code for Bank B, as it was sold to them, on their 2011 HMDA file. Bank A reports the buy-back of loan 002 as a purchased loan on 2012 HMDA file.
- Bank B – Reporting of 2011 and 2012 HMDA Data: Bank B reports loan 002 as a loan purchase for 2011. Bank B need not report the sale of loan 002 for 2012.
Bulk Purchase: When an institution purchases HMDA-related loans in bulk from another institution and neither a merger nor acquisition of a branch is involved, the purchasing institution must report the loans as purchased loans.
Completing the LAR
“A Guide to HMDA Reporting” includes specific reporting rules of some Loan/Application Register (LAR) fields when a HMDA-reporting institution purchases loans.
- Date Application Received: Enter NA.
- Action Taken: Enter code 6 only.
- Owner Occupancy: Enter code 1 unless the loan documents or application indicate that the property will not be owner-occupied as a principal residence.
- Applicant GMI: You have the option of collecting and reporting ethnicity, race, sex, and income of applicant/co-applicant for purchased loans; however, because the information may not be readily available for the purchased loans you should report the appropriate codes 4/7/4 for the ethnicity/race/sex fields for the applicant and co-applicant and the alpha characters NA for the income field.
- Request for Preapproval: Enter code 3.
- Rate Spread: Enter alpha characters NA.
- Lien Status: Enter code 4.
The remaining LAR fields (Application or Loan Number, Loan Type, Property Type, Purpose, Action Taken Date, Property Location, Gross Annual Income, Type of Purchaser (if loan is sold to another entity in the same calendar year), and HOEPA Status) are completed with the appropriate information for the purchased loans.